When I last signed-off, on this blog, almost exactly one month ago, the global death toll stood at over 50,000 people. I opined, at the time, that the velocity of the mortality rate would drive the severity of the global demand for answers and now that we stand at an excess of 255,000 deaths, this pandemic has reached every corner of our globe with a stiff line of questioning being posed, commercially as well as medically.
In our investment promotion bubble, authorities have had to sharpen their toolkits for an Aftercare blitzkrieg aiming to soothe a fight-or-flight response from foreign investors; whilst the daily grind of scouting for greenfield investment has taken a back seat. KPIs and business planning sweated-over during the previous Autumn, now virtually worthless. No one seems to believe that this will significantly change prior to the dawn of Q4, at the earliest.
The global Groundhog Day continues unabated with some people welcoming the new sense of balance in their daily schedule whilst others (perhaps their spouse or offspring) pine for a swift return to the comforting diversity of their normal daily output. There are signs, however, of an awakening and the public push for our governments to, at least, plan-to-make-a-plan for an emergence from the confinement and cocooning that has characterised this initial phase. Whilst some have been quick to point the finger at the early procrastination at the highest levels of government across the US and Europe, others have lauded the crisis response that lead to authorities supporting incomes, ensuring business had access to the liquidity it required and the guaranteeing of debt on credit. The next act (phase II) requires a different skillset to that of ‘troubleshoot’ and will need a deft and steady hand that can, simultaneously, maintain confinement (where necessary) whilst enabling reopening (where necessary). This is the original rock-and-a-hard-place.
Phase II support will need to be more targeted to ensure efficient reallocation of labour and capital from now dormant sectors of the economy, that may not reappear for some time, to those sectors with immediate need and growing labour shortfalls. Airlines are already shedding thousands of jobs at major carriers such as British Airways, Virgin Atlantic and United whilst industries operating at the frontline of this pandemic are crying out for additional manpower. We must accept that some sectors and, indeed, whole industries will struggle and fight for their very survival for as long as a vaccine-void exists. By that time many players – some big, many small – will have gone to the wall through no fault of their own, but unable to buttress the lack of certainty, fear of the unknown and cash flow crisis. Few businesses can weather such an external shock for much longer than the immediate-term. To mitigate as much as possible, the potential for economic scarring, our governing class must maintain an ever-watchful brief that rapidly pivots to redeploy sufficient support to sectors where jobs are lost and debt rises. Think travel, leisure and some corners of the informal economy.
At the macro-level murmurs from the big trade blocs give indication of the direction of travel from here. The EU’s Trade Commissioner has talked of the need for ‘strategic autonomy’ whereby all key players agree to play by an open and fair rules-based approach whilst recognising the mutual need to protect vulnerable sectors, such as healthcare and medical supplies, from ‘regional dependencies’. I don’t’ speak Mandarin but I know China when I hear it. We can also probably add power, nuclear, ports and strategic tech to that list. The EU continues to push a narrative of ‘tariff-reduction’ whilst, in the Land of the Free, President Trump took five minutes away from berating China to gently rebuke the hugely successful impact that Ireland has had in manufacturing pharmaceuticals for the global supply chain. He wants to see a reshoring of this capacity. Time to sharpen that aftercare toolkit once again. We expect to see this trade triumvirate maintain a verbal back-and-forth in the coming months with the key proviso that it is always better to watch what they do rather than what they say.
Finally, no one holds out much hope for a V-shaped recovery, allowing us to party like its 2019 again, and some pundits even caution us to guard against long-lasting changes on human behaviour that will imperil many contemporary business models. This is a serious challenge to the entrepreneurial class and we should all back them in this fight. Whilst the 2008-2010 Financial Crisis remains fresh in most of our minds and marked a distinctive change in the normal way of doing business we may find greater insight by looking further back into our recent history and to how our great-grandparents and their parents dealt with the Great Depression of the 1920s; an event that drove consumer behaviour as far into the 1950s and the dawn of the age of modern consumerism. Talk about economic-scarring.
Perhaps, however, if we can deftly apply an economic triage that, just like in Emergency Rooms, acknowledges that first-come is not first-served, we may collectively ensure that the impact is not as drastically felt as that of our forebears from the last century. To do that, vigilance will be our key ally as Spring turns to Summer. We will still need to have each other’s back.